403bear

401Kerfuffle, did you get a resolution on your follow-up questions? 1.411(d)-3(a)(3)(ii) states that "Section 411(d)(6) only protects benefits that accrue before the applicable amendment date." Normally, accrued benefits in a DC plan are defined as the account balance, so this would seem to imply that changing the fixed contribution would work prospectively. However, there is that weird parenthetical of 1.411(d)-4(d)(8) that states that the following are protected benefits: “the conditions for receiving an allocation of contributions or forfeitures for a plan year after such conditions have been satisfied.” If there are no conditions, then perhaps a right has accrued to the fixed formula for the entire plan year. But I can't seem to find a definitive answer to this. The closest I have found is TAM 9735001, but that is in context of a retroactive amendment to allocation conditions, not a prospective amendment.

Thanks, Luke. I would agree with that analysis if the DCFSA was set up to directly pay the provider on an on-going basis as services are rendered. However, in this case the employee already paid the childcare provider at the beginning of the term and the DCFSA reimburses the employee once services are rendered. So the money is already out of the employee's pocket, but seemingly not eligible for reimbursement from the DCFSA, at least from the date that the children were not allowed to attend care.

I am aware of the conversation surrounding the issue of mid-year changes to DCFSA elections with changing costs of care related to COVID-19 stay-at-home orders. However, is anyone aware of any thinking about employees in the following situation: employee pre-paid childcare costs at beginning of school year, as many care providers require, making a DCFSA election to cover the costs. In the typical case, employee would be eligible for reimbursements as expenses are incurred, that is, when services are rendered as the children go to the care provider. Now, the care provider is closed and the children are at home. No services are being rendered. However, some care providers are not giving refunds, so the childcare costs remain for the employee even though the children are not going to the care provider. Is there any sort of relief for this situation, or is the answer that the employee is stuck with a cost which is now ineligible for DCFSA reimbursements because care is never actually provided? Thanks for any insight!